Indian govt keen to speed up stake sale in four banks

NEW DELHI/MUMBAI, Aug 18 (Reuters): Indian Prime Minister Narendra Modi's office has asked officials to speed up the process of trimming government stakes in at least four primarily state-owned banks within the current fiscal year, according to two officials familiar with the discussions.

The sources said the four lenders are Punjab & Sind Bank, Bank of Maharashtra, UCO Bank and IDBI Bank, in which the Indian government owns majority stakes through direct and indirect holdings.

New Delhi wants to overhaul the banking sector and is also pushing the privatisation of banks and other state-run companies to help raise funds for budgeted spending amid a fall in tax collections due to the economic downturn caused by the pandemic.

The prime minister's office wrote a letter to India's finance ministry earlier this month asking it to expedite the process of privatising these lenders in the current financial year, which ends in March 2021, said one government source with direct knowledge of the matter.

"The process of privatising the banks has started," the person said, adding some consultations had already take place.

The prime minister's office and lenders did not immediately respond to requests for comment, while the finance ministry declined to comment.

The sources, who declined to be named as the discussions are private, noted the government's timeline is aggressive and might be a challenge given current market conditions.